Australian SX index close to 5-year high: Mecklai

Australia's S&P ASX 200 index surged to 5191.20 its highest closing level since June 30, 2008 as the big banks jumped after an upbeat earnings report that having more weight on index.

The stability of the financial factor and a high dividend yield has kept investors sentiment buoyed. Also, supported by low official interest rates, the economy has shown signs of recovery in areas outside of the mining sector in 2013. Among the encouraging signs have been stronger retail sales, robust consumer confidence and rising house prices. The market extended its gains after the release of CPI which remained within the central bank's target range, giving it room to cut interest rates to help spur the economy. Consumer prices rose 2.5 per cent in the first quarter from a year earlier and 0.4 per cent from the previous quarter.

A run of weak data from the United States, China and Germany over the past few weeks have weighed on the Australian market, but underlying demand has been sustained by a resilient domestic economy and a strong earnings season. The gains in index were capped due to fall in global commodity prices and weaker than expected Chinese PMI. If global central banks continue to spur growth by way of easing policy and domestic sentiment persist should pave the way the Australian index to breach the current five year high soon.

The below graph depicts the movement of Australia’s S&P ASX 200 index since 2008.

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